Welcome to BetaKit’s startup stories of the week! Here, you will find the week’s most important news, features, and editorials published on BetaKit.
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TOP STORIES OF THE WEEK
Good evening,
In case you missed it, Josh Scott and Douglas Soltys dug into news this week that Toronto-based FinTech Koho has moved to phase two of securing a banking licence, including what CEO Daniel Eberhard plans to do with it: compete.
The message was well received by industry observers. Senator Colin Deacon, a noted proponent of open banking, said a banking license would allow Koho to broaden and “offer very cost-efficient services.” This would place a disruptor amongst incumbents like the Big Six banks.
“It’s a great example, if Koho is successful, for others maybe to follow suit,” Deacon told me. “When there’s a strong competitor offering a disruptive product, it forces everybody to up their game and that’s a good thing.”
Koho isn’t the only FinTech to run the regulatory gauntlet. Questrade filed for a licence just before the pandemic, which added delays to the filing process, but the company expects approval in roughly a year, per The Globe and Mail. Meanwhile, competitor and sometime-partner Wealthsimple said approval as a securities dealer and Payments Canada member, combined with its existing partnerships with banks, have enabled it to build its products without filing for the licence.
If Koho wins approval, and mirrors Wealthsimple’s rise, it would become another FinTech startup to garner market share through traditional means. If so, what does it say about the state of financial services innovation in Canada if startups must succeed the same way as their incumbent competitors? I would love your thoughts!
‘Til next week,
Bianca Bharti
Newsletter Editor
C100 GETS A NEW LEADER IN MICHAEL BUHR
The non-profit brought on Michael Buhr as executive director to expand beyond its early-stage roots and help more Canadian technology founders at the growth level. He took over from Ray Newal, who departs C100 after only a year and a half as CEO.
In an interview with BetaKit, Buhr spoke about how Canada’s tech ecosystem has evolved since he first moved to Silicon Valley and outlined his vision for how to ensure C100 better meets the needs of Canadian founders.
FEDS (FINALLY) LAUNCH SR&ED CONSULTATIONS
Initially promised two budgets ago, Ottawa announced it kicked off consultations to revamp the Scientific Research and Experimental Development (SR&ED) tax incentive program. The federal government wants to modernize SR&ED, with a focus on research and development and retaining intellectual property.
While some believe the review is a big deal, others have wondered to BetaKit what it will accomplish.
SHOPIFY OFFERS NEW LOANS TO CUSTOMERS
Shopify expanded its loan offerings. The e-commerce giant launched a line of credit as well as term loans as part of a recent roundup of new products and features through its winter 2024 Editions showcase.
Ken Wong, managing director and senior analyst at the brokerage and investment bank Oppenheimer, told The Logic in December that he believes Shopify’s lending business is one of the top drivers of its merchant solutions segment, a key contributor to Shopify’s overall revenue.
Here’s our question: what does Shopify’s expanded loan offerings mean for struggling Clearco?
ANOTHER ROUND OF LAYOFFS FOR TORONTO TECH
This week, BetaKit broke news that Toronto-based online education firm Top Hat laid off 35 employees in a push to become a “self-sustaining business” this year.
Top Hat joins fellow Toronto software companies Loopio and Wattpad in shedding staff in early 2024 as Canadian tech layoffs persist and businesses continue to refocus their efforts and target profitability amid uncertain economic conditions. These layoffs mark each firm’s second round of downsizing in the past year.
BetaKit previously reported the departure of Top Hat CEO Joe Rohrlich and CRO Matt Schurk in January. The company said at the time that it was in the final stages of appointing a new leader.
UCALGARY’S UCEED TARGETS PRE-SEED FUNDING GAP
In June 2020, the University of Calgary launched a pre-seed startup investment fund to fill the funding gap between innovation and commercialization in the city’s technology ecosystem.
Three and a half years later, UCeed has expanded from two donor-supported funds housed within Innovate Calgary into a group of six that back early-stage tech startups developing innovative health, social impact, and energy-related solutions.
During this time, UCeed has become one of Canada’s most active pre-seed and seed-stage investors, deploying $8 million CAD into 44 startups, and amassing $22 million in assets under management.
The university is also launching ElevateIP Alberta, another federal program focused on helping business accelerators and incubators provide tools for Canadian startups to understand, manage, and leverage their IP.
CANADIAN SOFTWARE SECTOR IS RETURNING TO NORMAL
Venture capital funding across the Canadian software sector is now seeing a return to normal after a challenging two years, signalling the start of a promising new phase, according to a new report from Inovia Capital.
The report found that SaaS free cash flow margins are also up 10 percent since before the 2021 VC boom. This, coupled with historically low valuations, suggests a sector primed for a cash influx.
CANADA, UK SIGN AGREEMENTS TO WORK TOGETHER ON AI COMPUTE CAPACITY, HIGH-TECH RESEARCH
Less than a week after the United Kingdom walked away from trade talks with Canada, the two countries signed memorandums of understanding, agreeing to collaborate on “key technology areas” such as AI, quantum, and semiconductors.
SIX NEW #CDNTECH FIRMS ON TRACK TO UNICORN STATUS
Kitchener-Waterloo innovation hub Communitech has revealed six new Canadian tech companies that have the potential to reach $1 billion in revenue by 2030. To be considered, startups must meet specific criteria for year-over-year revenue growth and annual revenue.
The six new entrants join 59 companies that are also on track to meet the unicorn-status milestone by 2030, including AlayaCare, Borrowell, Dapper Labs, Hopper, Koho, Miovision, and Neo Financial.
AMID RISING BUSINESS COSTS, GODADDY’S YOUNG LEE SHARES HOW CANADIAN COMPANIES CAN KEEP THEM IN CHECK
The cost of doing business in Canada is rising, and compounding this problem is a wave of hidden costs that often elude initial budgeting and catch entrepreneurs and small businesses by surprise.
As Young Lee, Canada market and growth lead at GoDaddy puts it, “Canadian small businesses are stretched thinner than ever, particularly when it comes to their finances.”
As business costs continue to rise, Lee talked to BetaKit about how Canadian small business owners can keep expenses in check.
FUNDING | ACQUISITIONS | LAYOFFS
VIC – STN Video acquired by Media Media
CGY – Exro to acquire SEA Electric – $332M CAD
CGY – SumoQuote acquired by JobNimbus
GUE – Canadian Food Innovation Network dishes $1.9M to eight startups
TOR – Wisedocs – $12.7M CAD
TOR – Loopio, Wattpad, and Top Hat initiate layoffs
TOR – Flow acquired by Deloitte Canada
TOR – Tokens.com sells some assets to StoryFire
OTT – Relogix acquired by HubStar
MTL – Palisade – $1.5M CAD
QBC – Femtum – $5M CAD
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UNTETHER AI’S NEW CEO IS HERE FOR GLOBAL SCALE
“To compete in any field of technology, and especially AI, you have to be global.”
Like many Canadian tech companies, Untether AI started 2024 with a new CEO. Former Intel leader and Untether AI president Chris Walker explains why he came out of retirement for the role, and how he intends to capitalize on the company’s “scaling moment.”